One of the hardest things to do when starting a new business is finding funding to help launch your idea. Most businesses and entrepreneurs require a little bit of funding to get their business started in the early days. There is a variety of options out there, and many of these options are overlooked. If you are a first-timer looking to fund your business or just looking for other options, the following are a few ways you can use to gather funding for your business.
Bootstrapping
Bootstrapping allows entrepreneurs to finance their business idea through any additional personal funds they can find. This typically includes tapping into your savings account, putting a large balance on your credit cards, or opening up new lines of home equity. Using the money that you already have control over instead of borrowing or raising is a great approach to funding your business. Some entrepreneurs use bootstrapping until their business is 100% profitable.
The Family & Friends Approach
Tapping the ones you are closest with for funding can help you build up your business early on. Before you even ask your friends and family, you should have a business plan in place to share with them. This will allow you to explain what you are planning on doing with their investments in your business.
Loans
If you can show that your business has a chance to succeed, you can start applying for business loans or traditional bank loans. Some banks have recently announced an increased commitment to small businesses. While each business situation is different, it is possible to receive anywhere from $5,000 – $500,000 in loan funding.
Alternative Funding
Sometimes when you are looking for smaller amounts of funding, it is better to consider alternative options. There is a variety of sites that offer micro-loans and lend to start-ups and entrepreneurs. Crowd-funding sites have also grown in popularity and allow you to raise money from individuals and small supporters across the internet.
Angel Investors
If you’ve already launched your business and you’re starting to see a steady stream of revenue, it might be time to start approaching “angel” investors. An angel investor is a well off individual, or group of individuals who can pool their resources and provide capital for a business in exchange for ownership equity or convertible debt. These groups of investors are found in most communities, and after doing their due diligence, they will determine if your business meets their requirements and then reach out to you to set a meeting. Investments from angel investors can range anywhere between $50,000 – $500,00 or more.
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